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back to index backGLOBALtalk March,  2015


Labor Challenges to the Automotive Industry in Emerging Countries

Emerging markets are some of the most promising opportunities available to automakers today. Not only do they offer significant potential as consumer markets; they are also favorable in terms of low cost production locations.

However, these young markets come with their own set of problems. Some are politically unstable; others come with hard-to-navigate bureaucratic infrastructures; and most have very particular challenges in terms of the labor market. Let us take a closer look at four emerging automotive markets and their challenges from a labor perspective.

- Brazil. In 2013, there were over 150,000 people employed in the automotive industry; an increase of 6 percent over the previous year. With a growing domestic market, employment in the sector is set to rise, but there’s a growing skills shortage due to Brazil’s poor education infrastructure. In order to keep up with the growing workforce demand, employers are looking overseas for skilled talent that is willing to relocate.

- China. The automotive industry in China employed 2.65 million workers in 2010. The country focuses heavily on export, with South America being its largest destination. Due to the Chinese automotive industry’s projected annual growth of 8 percent, the need for workers will increase for the foreseeable future. However, there is a shortage of engineering, technical and managerial talent. Overall, employers report a deficiency in soft skills, inadequate English language skills, and a lack of technical training.

- India. India has become a small-car manufacturing hub and its exports are growing. Over 800,000 workers are currently employed in the automotive sector, and as more jobs are created, there is an increased demand for skilled workers. However, the industry faces three distinct challenges: first, India’s labor laws are very restrictive. Second, though the country has a high level of graduates, many are looking to other industries to work due to lack of career potential in the automotive industry. Third, educational institutions need to more accurately tailor their courses to current industry needs in order to bridge the skills gap.

- Mexico. With over 660,000 workers employed in the automotive industry, Mexico is the world’s 7th largest automotive producing country. It is hugely attractive as a production location for export due to its low costs and favorable free trade agreements, which is another reason why manufacturers continue to invest in the region. However, despite the high number of engineering graduates, the quality of education is not high enough, resulting in a skills shortage.

Strategic workforce planning

As we have seen, all of these emerging countries have one thing in common: a significant skills shortage that, if left unaddressed, could compromise companies’ bottom lines. For employers looking to start or expand operations in emerging countries, it is clear that their workforce strategies need to first and foremost address this skills shortage. Solutions could include:

- bringing in qualified workers from elsewhere to establish a foundation of knowledge upon which to build a learning environment within the company

- creating structures that enable qualified workers to impart their knowledge to other workers by means of apprenticeship or mentorship programs

- partnering with educational institutions to bring up the level of education and target it more to the industry’s current needs

Whether it involves hiring workers from abroad, training underqualified workers, recruiting raw talent from schools, or a combination of all three, when well thought out and implemented correctly, strategic workforce planning can help employers accurately assess their workforce needs and subsequently create methods that enable them to create a continuous pipeline of qualified talent.

Source: Kelly Services - GAI




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